EMEA Morning Briefing: Data Boosts Rate Cut Hopes
Summary
Gold and oil rose.European stock futures pointed to a mixed open after softer-than-expected U.S. inflation reports lifted hopes for rate cuts by the Federal Reserve alongside strong earnings reports from major banks.Investors will look to Bank of America and Morgan Stanley next in this weeks earnings reports.The latest developments sent a buy signal to stock investors, with the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite all marking their best trading days since the Nov. 6 post-election rally.Wall Streets trading session overnight was "all about inflation being tamer-and maybe the Fed being more forgiving- than people had feared," said Leslie Thompson, co-founder of Spectrum Wealth Management.The U.S. dollar held steady as investors further digested economic data and earnings reports.As far as investors are concerned, the absolute level of the dollar relative to other currencies doesnt matter as much as the pace of its appreciation, said Viktor Shvets, global market strategist at Macquarie.And as the incoming Trump administration takes charge, Jefferies Brad Bechtel and Brown Brothers Harrimans Win Thin note, "No matter how you look at it, you could argue that its the highest level, or the second or third highest level. "The past three weeks were a little sketchy, and that makes for a gut check on asset allocations," he said.Oil futures rose, resuming their rally with winter demand and prospects of supply curbs due to U.S. sanctions pushing prices to their highest level since August."U.S. "If we factor in the incoming Trump administrations tough stance on Iran, along with a sharply higher U.S. stock market, near term, WTI crude seems more probable of trading with an $80 handle," he said.WTI exceeding $80 could get OPECs attention to add more barrels at its next meeting, he added.Gold edged higher amid a likely technical correction, after front-month gold futures settled 1.3% higher on Wednesday.The soft U.S. core CPI print helped alleviate fears of residual inflation seasonality, said TD Securities Daniel Ghali.A downturn in Treasury yields could further contribute to strength in the precious metal, the senior commodity strategist added.Lower rates could boost demand for commodities and soften the dollar, making USD-denominated copper more attractive, ANZ said.The banks analysts add that the prospect of slower growth in supply also provided some support for copper prices, pointing out that Chile cut its production projections for the coming years, warning that new deposits are getting trickier to find and develop.Feds Williams Wants More Progress Toward Inflation TargetHARTFORD, Conn.-New York Fed President John Williams said he expects inflation to continue cooling toward the central banks 2% target this year, adding that he wont be satisfied until the goal is reached.Wednesday mornings inflation report brought reassuring signs that price pressures cooled through the end of 2024, but the new figures look set to leave the core version of the Federal Reserves preferred inflation gauge well above target last month.Rio Tinto Produced Slightly Less Iron Ore, More Copper Last YearRio Tinto said it produced and shipped slightly less of steelmaking ingredient iron ore in 2024, but mined more copper, bauxite and made more aluminum.The worlds second-biggest miner by market value on Thursday said it produced 328.0 million metric tons of iron ore last year at mines in Australias mineral-rich Pilbara region, and shipped 328.6 million tons as it drew from stockpiles. He was stuck in a war of attrition with Hamas in Gaza and facing ominous threats from Iran and its allied militia in Lebanon, Hezbollah.Big bank profits surged in the fourth quarter and Wall Street roared back to life, with net income rising 50% at JPMorgan Chase and more than doubling at Goldman Sachs.The banks benefited as big corporate clients grew optimistic about the economy and the incoming Trump administration, spurring a return to dealmaking, fundraising and trading.A lithium technology startup backed by mining giant Rio Tinto has raised roughly $17 million to test a process that could help unlock untapped lithium sources in the U.S. and lessen Chinas grip on global refining of the battery metal.Melbourne, Australia-based ElectraLith closed the 27.5 million-Australian-dollar Series A funding round with support from Chevron Technology Ventures, the venture-capital arm of the U.S. oil giant, and In-Q-Tel, a venture-capital firm in Virginia funded by the Central Intelligence Agency, said Chief Executive Charlie McGill.All times in GMT. Powered by Onclusive and Dow Jones.Write to us at newsletters@dowjones.comWe offer an enhanced version of this briefing that is optimized for viewing on mobile devices and sent directly to your email inbox.